VCA Inc. operates as an animal healthcare company in the United States and Canada. It operates through two segments, Animal Hospital and Laboratory. The Animal Hospital segment offers general medical and surgical services, as well as specialized treatments comprising advanced diagnostic services, internal medicine, oncology, neurology, endocrinology, ophthalmology, dermatology, and cardiology for companion animals; and sells related retail and pharmaceutical products. The Laboratory segment offers testing and consulting services in the areas of chemistry, pathology, endocrinology, serology, hematology, and microbiology, as well as conducts tests specific to particular diseases. As of December 31, 2014, it operated or managed 643 animal hospitals and 59 veterinary diagnostic laboratories. The company also provides communication and marketing solutions to veterinary practices, pharmaceutical manufacturers, and the pet owning community.
Take a look at the 1-year chart of VCA (Nasdaq: WOOF) below with added notations:
WOOF has been trading sideways for the last 2 months. Over that period of time the stock has formed a resistance area around $55 (red). In addition, the stock has also created an area of support at $52 (green). At some point the stock will have to break out of its current consolidation.
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The Tale of the Tape: WOOF has levels of support at $52 and resistance at $55. The possible long positions on the stock would be either on a pullback to $52, or on a breakout above $55. The ideal short opportunity would be on a break below $52.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
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